Cape Verde council questions economic forecasts
The CFP wants more detail on government predictions for 5.6% GDP growth and 2% inflation in 2027.
Cape Verde's Ministry of Finance projects the nation's GDP will grow 5.6% in 2027, with average annual inflation at 2%. The Financial Policy Council (CFP) presented a slightly more moderate outlook, anticipating 5.3% growth and 2.2% inflation. The government's growth forecast exceeds predictions from the International Monetary Fund (IMF) at 5% and the Bank of Cape Verde (BCV) at 4.9%.
The CFP stated that the government needs to better explain the factors supporting its scenario, particularly the evolution of tourism, investment, and domestic demand. While deeming the official projections plausible, the Council noted that achieving the predicted growth depends on international conditions and the economy's resilience to shocks. Cape Verde's reliance on imported fuel and food makes it vulnerable to global price swings.
Fuel prices rose significantly between July and October 2026, with gasoline up 21.7%, regular diesel up 36%, and diesel for electricity generation up 40.9%. These increases could raise transport, production, and energy costs, impacting inflation and household purchasing power. In an adverse scenario, economic growth could slow to 3% and inflation rise to 4.2%, potentially reducing tax revenue and increasing state financing needs.
Why it mattersCape Verde's economy faces risks from fluctuating international fuel prices and its dependence on imports, potentially affecting inflation and household purchasing power.